Costco Earnings Could Set The Retail Tone This Quarter (COST)
Costco Wholesale Corp. (NASDAQ:COST) reports earnings Wednesday Pre-Market with First Call looking for $0.83 EPS on $20.7 Billion revenues. We already saw the net sales estimated one-month ago at $20.06 Billion, so with weak numbers coming out from many other…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Costco Wholesale Corp. (NASDAQ:COST) reports earnings Wednesday Pre-Market with First Call looking for $0.83 EPS on $20.7 Billion revenues. We already saw the net sales estimated one-month ago at $20.06 Billion, so with weak numbers coming out from many other retailers it is hard to look for much upside. Since this marks the fourth quarter and year-end, this may give the first look at the long-term model from the company with 2008 guidance (estimates are $2.91 EPS & $71.6 Billion revenues; up an estimated 14% on EPS and 10% on revenues).
Costco put in new highs over the summer just over $65.50 and after themalaise shares hit as low as about $57.00 before coming back to $63.31as of Tuesday’s close (down 0.6% on the day). Would it be bittersweetif a retailer that already gave much of the data were able to challengenew all-time highs when the retail environment is not looking solid?
The average analyst target is just over $63.00, in-line with currentprices. With a forward 2008 P/E of 21.75 on projected 10% revenue and14% earnings growth, this seems fairly valued unless the companymanages another "wow!" quarter at a time that peers are seeming softand the retail associations are scaling back holiday and Q4expectations for the sector. Options traders appear to be braced for amove of $2.00 in either direction.
We won’t get too bold here because every time this has seen a majorpullback it has been an opportunity for those who missed owning Costcoshares before. Who knows, if things aren’t that great maybe they’llconsider asking if you’d like to buy a share of stock with yourpurchase.
Costco’s stock has not really been tied to the other big-box retailers and discounters because of its higher income shoppers and because of its higher-end focus. But if it can pull a rabbit out of the hat, Wall Street may go easy on some of the other retailers this earnings season.
Jon C. Ogg
October 10, 2007
Contact [email protected] for any questions or corrections.
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
